Millicom takes full control of Guatemalan JV in $2.2bn buyout

Today, Latin American operator group Millicom has announced that it will buy out its joint venture partner, Miffin Associates, to gain full control of Tigo Guatemala. 

 

The deal will see Millicom pay $2.2 billion in an all-cash transaction to acquire Miffin Associates’ 45% stake in the company.

 

According to the Financial Times, the move marks the largest ever single foreign investment in Guatemala. 

 

For Millicom, the attraction for the takeover play is clear to see. Despite nearly half of its population living below the poverty line, Guatemala has the largest economy in Central America and continues to exhibit steady growth. 

 

Within this environment, Tigo Guatemala has gone from strength to strength in recent years. The operator is already the country’s largest operator in both the mobile and broadband sectors, with 11.6 million and 392,000 subscribers, respectively, for these services. Tigo owns a large range of telecoms infrastructure, including 4,400 towers, two tier 3 data centres, and over 21,000km of fibre.

 

It is also the country’s second largest pay-TV provider.

 

All of this combined, means that company is comfortably the most profitable business within Millicom Group, with an EBITDA margin of over 51%. In 2020, it reported a revenue of $1.5 billion and the company is still growing, with Millicom expecting to increase this revenue by 6% year-on-year.

 

“For Millicom, this new investment reflects our continued confidence in the thriving economy of Guatemala and our renewed commitment to the digital transformation of its society. Hand in hand with the vision and strong commitment of our team of more than 3,100 employees in the country, we will continue to build the digital highways that connect people, improve lives, and develop communities all throughout Guatemala,” said Millicom CEO Mauricio Ramos, who noted that the deal should also increase the company’s cash flow and net income, as well as simplifying the company structure. 

 

In related news, Ramos recently alluded to the potential for Millicom to spin off various infrastructure assets from its core business, saying in the company’s latest earnings call that the Millicom has “projects underway” that would “unlock value in the future” for at least two of its infrastructure assets. Millicom currently owns around 9,000 towers across its international footprint, as well as 12 data centres and 170,000km of fibre.

 

Millicom may well be looking to Telefonica and America Movil for inspiration here, both of which have sold their separated tower units for enormous sums in the past year.